Here's an article that basically just feeds right into the beautiful deliciousness that I'm looking for every single day. It just makes me tingle inside because it makes my bullish bias get so happy and it just makes me feel so comfortable in my Christmas sweater. It's an article that's titled rare Buy Signal hints that the worst is over for stocks. Is this a piece in Bloomberg that could potentially be reiterating the Nike Swoosh may think so based on the title, but I haven't even read the article yet I Just saw the title and I'm like we.

So let's take a look. A purely price-based signal. Oh, so it's technical based. Okay, a purely price based signal suggests the bottom is in for stocks.

Despite several lingering risks. this is by Simon White. This is a hard column to write. Oh, is it deposit flight? Poor liquidity, weakening earnings? A credit crunch recession? It would be much easier to list reasons why equities should be lower, but that doesn't necessarily mean it will be.

As anyone who has spent enough time in markets understands, they have a habit of being anti-utilitarian causing the most people the most amount of pain. That's an interesting line, actually, because utilitarianism is is making sure you do the best for the most amount of people, right? But stocks basically do the opposite. It thus always pays to consider the other side of the case, but even with the best will in the world, it's hard to fully let go of one's biases. That's why technical analysis can be so powerful.

But in this case, technical analysis is bullish. Some call it Voodoo, but using Market data to identify Trends is as old as economics, dating back from the 18th century when Japanese rice Traders used Candlestick patterns to predict price movements. Recently, one very technical base Buy Signal called the Kavuk has triggered, suggesting the long-term outlook for U.S stocks is constructive and the bottom is potentially already in a rare but reliable Buy Signal for stonks. Fascinating.

All right. I'll pull this up in a moment here. All right. What does it say here? The Kappa is at base, a momentum oscillator, which triggers when the medium and longer term measures of momentum begin to turn up on a persistent basis.

Okay, got it. Uh. moving average is essentially of momentum based on adapted parameters. It triggers only rarely.

But the times it has triggered were October 1982. August 1988, April 2003 August 2009 and all of those were good buying opportunities. It outperforms the S P average return over a three month, six month and six month horizons with the greatest absolute outperformance over 12 months 19.1 versus 9.7 percent. Wow.

S P returns after. That's the S P returns after you you hit this. Okay, so here's a chart of what this uh reliable Buy Signal indicates and so here you can see 82 great Buy Signal 88 great Buy Signal soft Buy Signal here in the early 90s, which was also correct 2003 April very correct and uh and and uh, 2009. Notice this actually isn't at the bottom.

like if I draw a little arrow here. Uh, that's not a little arrow, but whatever. if I draw a big Arrow Notice that the bottom actually came before the indicator triggered right. so the the in like the indicator actually triggers once you pass a bottom.

which makes sense because we we kind of passed the bottom. What? Um, you know December for some stock, some stocks was October some stocks was July so you kind of passed that bottom. Okay, now let's look at the returns. Oh, that's quite interesting and see.

this is why people like have it. Why would you be in stocks. treasuries are yielding four percent and I'm like that's nice. you're getting four percent.

I'm going for 20 for the year. you know some actively managed ETFs are already up 25 year-to-date We won't mention any names uh you because you have to go look and you have to net out fees and all this kind of stuff. And so that's why we just don't mention any names around here. Uh, but there are many.

There are many different ETFs that have done very well this year. Car park signal shows above average forward returns S P returns after the car park I Never never thought I'd be so happy to say cop pock. Overall return period data back to 1979. the three-month Kappa gave you a five percent return on the S P 500.

the six month car park gave you a 10 12 month gave you that 19-ish percent uh compared to periods of time where you did not have Uh indicator. All right, that's cool. The great appeal of technical signals is their simplicity. Uh, this technical analysis uses only the S P's closing price on a daily basis.

No economic data, no political interference, no opinion. It's fixed, and it's unemotional. This also signals. This also means signals such as the Kawak can trigger at very counter-intuitive times, a signature of contrarianism and a Hallmark of many of the best spying opportunities don't tempt me.

Uh, the car block is previously triggered well before the FED has started to hike again when the Ism was under 50, and while unemployment was Rising as the signal is not trying to pick absolute bottoms, the S P is generally already off its lows. That's true, we are. We actually that was one of the first things we saw as it wasn't really aligning with bottoms. Uh.

and and I I'll give a little bit of a of a potential thesis on why this is happening. Uh, and then I want to keep reading about this bro, because there's some other TA in this as well. But uh, uh. Car Park Thesis? Cop pick.

No, that's that's not what I wrote Apple Stop it. No, No. I didn't write that word either. No, Okay, there we go.

All right. Oh geez, Oh God There we go. All right. So why why would it potentially be possible that you could have this large downtrend and maybe that Nike Swoosh we've been talking about.

But why would that? Let's call it that what it is. car park. Why would that trigger here as a big buying opportunity? Uh, Well, aside from technicals, what what actual reasons could we potentially give to this potentially triggering? uh, Well, in my opinion, we've got. we have so much bad news, right? We have so much bad news.

but uh, inflation is actually trending down. Maybe not as exactly quickly, uh, as people had hoped or wanted. But the pain is the pain is not getting worse, right? Uh, and and that's that's the one thing crushing the economy right now. And so when we actually we look at everything else is like a symptom of the disease.

Like let me try to put it this way, let's Okay this. I I I Hate making this reference because it's so terrible to people who have to go through this. and I wish this upon nobody and whoever has this. Affliction I Wish you a fast recovery.

But inflation is frankly like cancer. Okay, and uh, your vomiting is like the bank crisis. Your medicine is like, you know your your chemo uh is like higher rates, right? Uh, your? your hair loss is like, uh, you know, hair loss. There we go.

It's like earnings going away. Uh, your fatigue uh is like uh, you know cash going away right? Like cash savings going away uh and um and and loss of appetite. You could call it right. Whatever.

Okay, so a little morbid, but I'm trying to make this comparison here. Okay so so everybody bearish because of like people are looking at the economy and people are like dude, the economy is vomiting, it's losing its hair and and it's losing weight like this is a crap economy. but what if you're able to look and say but dude, the cancer is going away well then if that's going away, then eventually all of those problems will go away too. So yeah, there's a never-ending list of crap you have to deal with when you go through something as terrible as this.

But if the actual cancer is going away inflation then eventually all the other crap will go away. That's sort of if I If I had to give an explanation as to, maybe like on a non-technical basis why the bottom may already be in, it would be that now I Understand people are like, but usually the stock market doesn't bottom until you're actually in a recession and a yield curve is re-steated I know. But the weird thing is, everyone knows that. And so the irony is, when everybody knows that stocks bottom when the recession begins, it's possible that the stock market's like, well, if the cancer of inflation is going away and the stock market's going to bottom when the re-inversion occurs, let me get in before the bottom.

So that way. I I Can you know Because we're not going to be able to perfectly time the bottom? Let's get in before so we can get to get good deals before and then ride the the recovery afterwards, right? So it's possible that you sort of have that pre-pricing in of what's to come because that cancer inflation is going away. Okay, my thesis, let's keep going on this similarly did I By the way, mention that if you could get if you wanted super powered book summaries uh, to get you inspired to maybe read the full book, you could go to Shortform.com Meet Kevin I Mean you could go through basically an entire book in 20 minutes because these are perfectly uh created and crafted super powered summaries they call them. And so 20 minutes you get 2x, You could literally go through a book in 10 minutes.

You're not actually going through the whole book, right? but you might get inspired then to read the whole book later. But if you just wanted to check that out and get a preview, it's fantastic. A way uh, to uh to to go through some of the the core arguments within books. Uh, check that out by going to Shortforum.com Meet Kevin and you'll get 25 off uh, any of their subscription plans, which is pretty awesome.

So make sure you go to Shortform.com uh, that is a paid promotion. Look I Fixed the phraseology up here. Let me fix the spelling all right. Similarly, today does not appear here to be a good time to buy with economic data weakening and credit titing.

but if we were to listen to only this signal, it tells us to buy and close your eyes. Another reliable signal. The Zig Thrust thrust has also recently triggered. The Svig activates more often and does have false positives compared to the Kappa, but it is a good gauge of a medium turn trends of the market.

Is this like a Jason Svig the Intelligent Investor indicator? probably I Like that guy, that guy's cool. Uh, what is this breath? Trust the New York Stock Exchange Sleek thrust with adapted parameters. Okay, good. Lord that's got a lot of green signals.

Uh, but anyway, you can see it's activated over here. Uh, it looks like over here you had a little bit of pain after it activated One said here, you add some paid after it activates so this one's not as reliable. I'd say it's reliable here here. over here here was great.

This was too early, so they're definitely There are a few occasions where it's a little too early here. It was definitely too early. Here's too early, but it seems like more often than not that's that's probably at least somewhat correct. Okay, stand by, let's see what else we have here.

Okay, okay, cool. The signal goes off whenever breath defined as the net number of socks Rising on the New York Stock Exchange rapidly goes from being weak uh, very weak to very strong. thrusts higher. Oh I Love thrusting.

Uh, thrusting. It's fantastic. It shows good above average returns over the next one, three and six months. If technical signals strength is their Simplicity it could also be their weakness.

No, Trader or investor could ever take a decision based purely on them unless part of a more sophisticated Quant strategy. Ooh fancy. It would be tricky to say the least to explain to your client that you were long purely because of one moving average. Well see, that's always what I think is so funny is I actually think a lot of the financial advising industry uh is is uh is based on well how do I explain this to my clients? Seriously I think most of the most of the stock market and financial advising business is.

How do I explain what I did to my clients? And so in 2022? oh we are going into Consumer Staples because everybody's still gonna have to buy toothpaste and then the clients are like yeah yeah, that makes sense and then now it's 2023. gold is rising and if we're going into a recession, you know historically gold goes up and copper goes down. Yeah yeah yeah yeah yeah yeah yeah yeah. that makes sense.

And so you get this. Like all this trading and rebalancing of your portfolio and it's really moronic because it just sets up a lot of commissions. uh in in the financial advising space. Uh, while at the same time trying not to have clients flee, right? Because if you have like a diamond balls approach and you're like just give me pricing power stocks at good deals people are gonna be like but right now like you, you're not, you're not protecting me, you're the problem.

and then they they go and then they go YOLO into gold at the top of the market and it falls and they YOLO and to Staples at the top of the market and they're false and then and then they come back to a different financial advisor because it wasn't. You know, whatever it the whole business screwed. This is why most people lose money in it. That's what I say like the easiest way to build wealth is Real Estate because this business is rigged.

but Kevin this sell of course on stocks. Yeah, I do and guess what I tell you stuff like that a lot more. some really good perspective in there. Okay, what else we have? Uh, it pays to incorporate these signals into your views.

In today's case, the message is that despite everything pointing towards weaker stocks, price action is Whispering that it might be run in other words stocks May or have already bought them. As already said, this was a hard column to write. Stocks could very well go on to make new lows before they exceed last year's high. But great buying opportunities only.

look Elementary In retrospect and it would be remiss not to point out that this may be one of them. Oh oh oh, tingle me on the inside. This may be one of the best spying opportunities. What? they're saying What? I Like this column a lot.

This column, this column talked talked right to my soft spot and she talked dirty to me over here. This was really cool. All right.